Limit Your Liability

If someone slips on your driveway and you aren't adequately insured, it could wipe you out financially. Medical bills and legal fees, if there's a lawsuit involved, can run in the hundreds of thousands of dollars. For that reason, experts strongly suggest that homeowners not scrimp on liability insurance, which covers the costs of personal injuries and damage to other people's property in or around your house. It's a relatively inexpensive safety net, especially if you have a lot of assets to protect from litigation.

Basic homeowner's policies provide about $100,000 in liability coverage. But increasing coverage to a more practical $1 million will only hike the premium about $40. Liability protection can be more expensive for people who have potentially dangerous features on their property, such as a swimming pool. In those instances, an umbrella liability policy — a separate rider to basic insurance that covers an individual's home, rental properties, and automobile for $1 million or more — is recommended.

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